Abstract:Performance
measurement (PM) enables management and elected policymakers to make better
decisions about the delivery of public goods and services. Although local
governments’ use of PM has grown considerably over the past two decades,
little empirical evidence explains the variation in usage. Most research
has been normative or descriptive, with the exception of a few studies that
examined multivariate relationships, including Kong (1998) who conducted a path
analysis of PM utilization in management and budgeting in the federal
government. Replicating Kong’s methodology, but at the local level, this
study uses structural equation modeling to examine the organizational
(organizational culture and rewards and sanctions), human (leadership,
involvement of the central budget office, and citizen participation), and
measurement factors (measurement capacity and data quality) that affect PM
usage.

Kong found that involvement, goal clarity, and organizational culture directly
affected PM utilization in budgeting. This research found that data
quality had a significant effect as well. It did not show a direct
relationship with rewards and sanctions, which was used as a proxy for goal
clarity. Kong did not examine reporting. This research found data
quality most strongly influenced PM reporting, but organizational culture and
leadership also had a significant effect.